November 21st, 2008
What are some issues that large enterprises need to consider when
purchasing used business software applications? For example, various
websites are offering for sale used or surplus copies of software
applications such as Oracle database or Lawson financials at up to 75
percent less than the cost of buying new software. This seems to good
to be true so I'm looking for issues to consider before buying the
software to make an informed and intelligent decision.Hello mollydog,
Thank you for your question.
My initial reaction is that selling used software is legal and ethical
IF the seller no longer has the software installed on any machine AND
has not used the existing software license to obtain an upgrade at a
discount. For example, if one is selling Norton Anti-Virus 2000
because they got a $15 deal to upgrade to Norton anti-Virus 2003, that
would not be a legal transaction. If they had switched to McAfee,
there would be no problem.
I recall early on in the PC revolution the analogy for software was
that it was like a published book, More than one person could read it,
but only one at a time. It would be breaking to make a Xerox
copy of the book and then resell the book while retaining the copy.
In the same way, you could install a program on your desktop and your
laptop and be legal to the shrink wrap terms if you did not use both
machines at the same time. Tough to enforce, but technically the terms
of sale on many software packages.
I decided to see what others have to say on this matter:
EMS Professional Software
http://www.emsps.com/oldtools/buying.htm
"EMS Professional Software buys all kinds of old software for
microcomputers....
Some of their requirements are:
A letter authorizing transfer of license to new owner - this is
required for all purchases.
License restrictions.
With few exceptions, EMS does not buy or sell any software with
license restrictions listed below:
-NFR (Not for Resale) - License may not be resold. Dealer demo, beta,
and some prize copies, for example.
-Academic license - Only licensed for use by students and schools (and
some other organizations), may have limited support. We will only sell
these to students or faculty who can present a copy of their current
school ID via email or fax. As a result, the price we can pay is much
lower than for non-academic products.
-OEM (Original Equipment Manufacturer) - Only licensed for sale with a
new PC. This includes any materials with a hardware manufacturer's
name on it. There are some exceptions for software produced in the
1980s and early 1990s. We can buy these only if they are dealer
overstocks, still sealed.
-Subscription - Any CD extracted from a subscription series, where no
license transfers. We will buy the original boxed Microsoft C++
subscriptions only if they are complete.
MS Easy Fulfillment or MS WorldWide Fulfillment - Media provided to
licensees by MS.
-MS Company Store - Software sold to Microsoft employees by Microsoft.
-Evaluation/demonstration/promotional. Also called "Not for Resale",
"NFR", and "Dealer Demo"
-Any software for which the license cannot be transferred. Please read
your license agreement carefully before offering any items to EMS. You
may not be able to transfer software if you have used it as the basis
for an upgrade to a later version of that or other software. Some
software simply doesn't permit any license transfers. If whoever sold
you your software failed to make the license transfer restrictions
clear before you bought it, we recommend you demand a refund from the
seller or a written license transfer authorization from the software
producer...
These are very good guidelines for you to observe and show the mark of
a professional software reseller.
David Southgate has a very interesting and pertinent article:
http://www.notlimitednyc.com/southgate/020723.html
"Buy and sell used IT assets via this new marketplace
Published on July 23, 2002
on TechRepublic.Com
When companies liquidate assets, it's usually the "hard"
assets-servers, desktops, monitors, and telephone systems-that are
quickly pushed onto the used equipment market at bargain prices. Until
now, most virtual assets-enterprise software and other intellectual
capital-have either been chucked into circular files or boxed away in
a vacated office corner.
That's likely how former retailer Service Merchandise would have
handled its virtual IT assets if bankruptcy had occurred a year or two
ago. But today, thanks to a new marketplace that buys and sells used
enterprise software and business intelligence applications, the
retailer is getting some money for its virtual assets as well...
...Service Merchandise is just one of several companies that has
turned to IP Recovery, an Aspen, CO-based company launched this April
to facilitate the buying and selling of used enterprise software and
other intellectual property nationwide...
...With the exception of Microsoft, whose drum-tight licensing
agreement and team of salespeople have been resistant to IP Recovery's
resale market pitch, six large software makers approached IP Recovery
and have agreed to the sales approach.
"We've looked at 200 different software contracts," explained IP
Recovery director Gabriel Fried. "In many cases, assignment of the
contract can only be made with the prior written consent of the
original vendor, but the consent should not be unreasonable."
What makes the new business model work is that buyers are happy to get
top-notch software for a fraction of the retail cost, and most
software manufacturers actually don't object to the resale. After all,
said Fried, they're not losing a sale-they're actually gaining a new
customer, complete with service contract arrangements and eventual
upgrade purchases...
...Fried estimates the U.S. market for used software and business
intelligence to be worth $1.5 to $3 billion per year in terms of "the
total recovery available to potential sellers."...
...It's not only companies on the skids, though, that come to IP
Recovery. Sellers and buyers come in four flavors:
-Firms that have ceased operations. These are companies that come to
IP Recovery before or after bankruptcy court.
-Firms migrating systems (scenario 1). A company migrating from an old
license of a Lawson financial system to new PeopleSoft package might
look to resell an old license.
-Firms migrating systems (scenario 2). A company using a
three-year-old Lawson financial system might choose to migrate to
PeopleSoft. The company has depreciated the cost of the old license.
But by reselling the old software, IP Recovery helps the firms find
new money.
-Companies in the process of merging operations. In this case, two
companies may find they've got two different kinds of software
performing the same functions. Rather than run parallel systems, they
choose to eliminate one and sell it..."
So, it looks like used software on the corporate or enterprise level
is becoming a burgeoning business and is quite legal with proper
documentation and licenses. Interesting that Lawson financial systems
are specifically mentioned above.
You can find Ip Recovery here:
http://www.iprecovery.com/
ZDNET UK follows the Microsoft position on used software:
http://news.zdnet.co.uk/story/0,,t269-s2096850,00.html
"Microsoft cracks down on used Windows sales
08:20 Tuesday 9th October 2001
Michael Kanellos, CNET News.com
In the run-up to the release of Windows XP, Microsoft is keeping a
close eye on online sales of old versions of Windows in case they
violate its or trademark rights. People looking to off-load
their old Microsoft software to make way for Windows XP have to be
careful about selling it online...
...Under the licensing agreement with Microsoft, people who buy a
computer with pre-loaded software cannot break out the software and
sell it.
Ron Faul learned about this the hard way. Faul, who infrequently sells
video games on eBay "when I'm tired of them", was trying to auction
off two copies of Windows 95 for between $5 and $10 a piece, and a
trial copy of Windows XP for $5. Faul said he obtained the Windows 95
programs by removing them from two computers he owns. Microsoft
objected and down went his auction...
...Charmaine Gravning, a product manager for Microsoft's Windows XP,
said the policy is clear that people cannot sell or even share the
software that comes pre-loaded on computers. If a consumer buys a copy
of Windows in a store, they can transfer or give away the software for
free, provided they include the license agreement, and all other
documentation..."
So, even Microsoft, which IP Recovery notes as difficult, will
seemingly allow retail boxed software to be resold if it includes the
license for the product. However, this article does address used
software on Ebay and the attending problems and continues:
"...If anything, Microsoft will likely have the best success of
stopping unauthorized sales by dealing with large companies like eBay.
Over a year ago, eBay began the VeRO program, which allows owners of
intellectual property to notify eBay when they find an infringement of
their property rights. The auctioneer will make "good faith effort" to
close the sale, eBay spokesman Kevin Pursglove said.
Besides Microsoft, among the other 2,000 VeRO members include Adobe,
Warner Bros, Vanderbilt University and the Hard Rock Caf .
When eBay gets a complaint, the company pulls the auction and notifies
the seller of the complaint without trying to determine whether there
has been an actual violation. It is up to the seller to prove the sale
is legitimate for it to be re-listed..."
CNET has an article on the used software market:
http://news.com.com/2100-1017-271881.html?legacy=cnet
"Finding gold in dot-bombs' idle software
By Greg Sandoval
Staff Writer
August 20, 2001, 2:15 PM PT
Liquidation specialists have gotten fat selling the assets of dead
dot-coms, but there is one type of asset they may have overlooked.
Website Recycling Company, or Webreco, an online spinoff of the nearly
100-year-old liquidation company Gordon Brothers, intends to resell or
license software mostly from defunct technology companies. On Tuesday,
the company is expected to announce its first major deal..."
So there appear to be a number of credible used software resellers
that are sensitive to the legal requirements of transferring a
software license. In the case of Ebay, as with almost any Ebay
auction, it is buyer beware. Ask the seller lots of questions and
gauge their answers. If the seller is moving to a different software
package or liquidating an out of business company, you may have a
legal purchase and a bargain. If not, and if they are unwilling to
provide a letter of license transfer and / or the original
documentation, you might be buying into a headache if your desire is
to be above board in the transaction.
SoftwareExchange.com has this to say:
http://www.softwareexchange.com.sg/company/about_archive.htm
"...Our Solution.
The solution we provide involves buying back original software
licenses from our vendors, and then re-selling them to needy users.
These users would either utilize the software as it is or treat it as
a qualifying module to upgrade to a newer version.
At this point in time, you may ask: "Who are your vendors?" and "Is it
legal to buy and sell used software?"
Our Vendors.
Our vendors are typically individuals or organizations that have
acquired a newer version of the same software, or have migrated to
another platform altogether. Taking the Microsoft Windows 98 for
instance, our vendor may have purchased a new PC bundled with the
latest Windows NT or switched to other operating systems like Linux .
To help defray part of this new software investment, we would buy
back the Windows 98, which is now redundant to the vendor but still
essential to others.
Is it legal?
In terms of legality, we only acquire from our vendors software that
can be transferred. In fact, many major software manufacturers like
Adobe , Corel , Microsoft , Novell and Symantec do allow their user
licenses to be transferred from one party to another. Click here to
find out more.
Of course, besides the original installation disk, the software
product we purchase must also comprise (if applicable) Certificate of
Authenticity (COA), End-User License Agreement (EULA), user's manual,
warranty, registration and other relevant documents. This is to
ensure that our customers, in the course of acquiring these used
software products, are not deprived of the technical support and other
benefits, e.g. future promotions and upgrade options they are entitled
to..."
This page show terms of transfer of software licenses for some of the
major software companies:
http://www.softwareexchange.com.sg/company/legal.htm
For example:"Adobe
End-User License Agreement
"You may not rent, lease, sublicense or lend the Software or
Documentation. You may, however, transfer all your rights to use the
Software to another person or legal entity provided that you transfer
this Agreement, the Software, including all copies, updates and prior
versions and all copies of font software converted into other formats,
and all Documentation to such person or entity and that you retain no
copies, including copies stored on a computer."
(Source: Adobe Photoshop 5.0, 1997)"
You did mention Oracle:
EMS has interesting disclaimers on their Oracle sales:
http://www.emsps.com/oldtools/oracle.htm
"The following old Oracle products are available from EMS Professional
Software. Unless otherwise specified, each product includes ONLY
original manuals and media in usable condition. EMS is not selling
licenses to use any software on any media for any particular purpose.
EMS only sells to computer professionals who understand the
complexities of software licensing. You should contact Oracle directly
to determine what action you must take to be licensed for any software
use...."
I called Oracle at 1-800-Oracle1 and spoke to a sales rep that had
never been asked the question about reselling used copies of their
programs. I was pointed to a license agreement
:
http://oraclestore.oracle.com/OA_HTML/ibeCCtpSctDspRte.jsp?section=11365&media=os_local_license_agreement
Reading through this, it does not seem to address selling their
software used. Two sections do jump out at me:
"Ownership and Restrictions
Oracle retains all ownership and intellectual property rights to the
programs and materials resulting from the services. You may make a
sufficient number of copies of each program for your licensed use and
one copy of each program media; you must obtain Oracle's prior written
approval to make additional copies...."
and:
"...You may not assign this agreement or give or transfer the programs
and/or any services ordered or an interest in them to another
individual or entity..."
So, it appears that selling used copies of Oracle products may not be
allowed under their agreement. I would be very sure before making any
investment. If you find new Oracle software on Ebay, I would call
Oracle to verify they will support the product if it is indeed new and
shrink wrapped. Do be wary of bootlegged copies.
Search Strategy:
buying used software
"used software"
"reselling software"
selling +"used software"
"used oracle software"
I trust my research has provided food for thought on buying used
business software. If a link above should fail to work or anything
require further explanation or research, please do post a Request for
Clarification prior to rating the answer and closing the question and
I will be pleased to assist further.
Regards,
-=clouseau=-
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